You may have seen this statistic before or one resembling it: the average 65-year-old retiring couple can now expect to pay more than $250,000 in health care expenses during the rest of their lives.
In fact, Fidelity Investments now projects this cost at $285,000. The effort to prepare for these potential expenses is changing the big picture of a retirement strategy.
Individual retirement savings strategies have been altered. How many people retire with a dedicated account or lump sum meant to address future health costs? Probably very few. Many retirees end up winging it, paying their out-of-pocket costs from their incomes, Social Security benefits, and savings.
While couples can save together, individuals also have considerable health care costs as well. Fidelity estimates the costs as $150,000 for women and $135,000 for men. The costs can potentially take up a considerable amount of a retiree’s income – 9% to 14%, according to Fidelity. Per year, out-of-pocket costs, including dental and vision, could run from $3,000 to $8,000 during an average year.
While households have begun adjusting their retirement expectations, considering their projected health care expenses, businesses have also quietly made some changes. If you can take advantage of employer matching contributions to your workplace retirement account, take advantage of that benefit.
There is no easy answer for retirees preparing to address future health care costs. Staying active and fit may lead to health care savings over the long run, but some baby boomers and Gen Xers already have physical ailments. Barring some sort of unusual economic phenomenon or public policy shift, the question of how to pay for hundreds of thousands of dollars of medical and drug expenses after 65 will confound many of us.
“Act as if what you do makes a difference. It does.”
– William James
Recipe of the Week
Zippy French Toast
- 1 tsp. cinnamon
- ¼ tsp. nutmeg
- 2 Tbsp. sugar
- 4 Tbsp. butter
- 4 eggs
- ¼ cup whole milk
- ½ tsp vanilla extract
- 8 slices of your favorite bread
- ½ cup warm maple syrup
- 2 cups berries or favorite fruit
- In large bowl, mix spices and sugar.
- Add butter to skillet over medium heat
- Beat eggs with milk, vanilla, spice and sugar mix.
- One at a time, immerse each bread slice to the egg, and then fry each side in skillet.
- Garnish with berries and add syrup.
- Serving suggestion: Jam or preserves make a nice change from syrup and berries.
Recipe adapted from foodnetwork.com
4 Facts About Capital Gains
- A capital gain or loss is the difference between what you originally paid for the asset (your basis) and the amount you get when you sell an asset.
- You must include all capital gains in your income, and you may be subject to the Net Investment Income Tax if your income is above certain amounts. Consult a qualified tax expert for help.
- The IRS allows you to deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.
- If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.
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Tip adapted from Green Living Ideas